Which of the Following Is NOT a Problem That May

question 6

Multiple Choice

Which of the following is NOT a problem that may arise from estimating a binary dependent variable in an OLS regression equation rather than a logistic regression equation ______.

• A) increased Type II error rate
• B) predicted values of the dependent variable that extend beyond the bounds of 0 or 1
• C) the functional form of how the independent variable affects the dependent variable may not be linear
• D) the error terms (residuals) are not normally distributed and thus violate the assumption of homoscedasticity

---

Definitions:

Identical Products

Goods that are exactly the same in every aspect, often seen in perfectly competitive markets where products are indistinguishable between suppliers.

Control Over Price

The ability of a firm or market participant to influence or set the price of goods or services, often seen in markets with limited competition.

Steel

An alloy of iron and carbon, and sometimes other elements, widely used in construction and manufacturing due to its strength and durability.

Interdependence

A relationship between entities where they rely on each other for resources, information, or trade.